Spelling Out a Strategy for Observing Good Governance in

Managing Retirement FundFaith Letlala 19 August 2013

Good Governance StrategyAgenda - Sound Template from Circular

PF No. 130

• Overview of Good Governance• Governance By The Board• Governance By The Board of the Operations of

the Fund• Management of Stakeholder Relationships

Good Governance Strategy - Accountability

•Stakeholders – members, sponsors, employers, dependents & nominees

•Retirement Fund exists for purpose of the benefit of its members

•BoT & PO (integral to good governance) are fiduciaries. Acting in good faith with integrity

•Legal framework – pensions law, common law, customary law, regulation, fund rules, codes of conduct & policies

Good Governance Strategy – Governance by the Board

•Board as fiduciaries responsible & accountable for Fund

•Delegation is NOT equal to Responsibility – the buck stops with the Board!

•Easiest guide for Board is not forgetting that members are first in respect of Fund

•Chairperson – strategic leader of Fund

•Principal Officer – governance and compliance official for Fund

Good Governance Strategy – Governance by the Board

•Code of Conduct is important & imperative

•Conflicts of Interest (COI)

•BoT should be independent for benefit of members-COI Avoidance helps to eradicate COI -Unavoidable COI to be managed and mitigated-Declaration Forms

Good Governance Strategy – Governance by the Board

•BoT – competency is key, work smart by using Sub-Committees as permitted & governed (terms of reference, fund rules)

•Educate new Board members & also go through continuous improvement training for all Board members – education is not an event

•Sub-Committee e.g. Investment Sub-Com, Risk Benefits Sub-Com, Audit & Risk Sub-Com, Communication Sub-Com

Good Governance Strategy - Governance by the Board of the Operations of the Fund

•Governance is key

•Oversight of Fund activities key for Board – controls & measure have to be in place

•Operations have to be sound and monitored

•Use expert advisers & providers – actuary, EB consultant, investment consultant, legal & other expertise (e.g. insurers & investment management)

Good Governance Strategy - Governance by the Board of the Operations of the Fund

•Risk Management (have a policy in place)

-ID risks facing Fund

-Assess impact of risks to Fund

-Mitigate risks with controls

-Monitor risks & associated controls in place

Good Governance Strategy - Governance by the Board of the Operations of the Fund

•Investment Policy Statements (IPS)-Usage of investment consultant-Custodian of assets (know literally where assets are-Are there Proxy / SRI / Incubation Policies in place, where deemed imperative-Assets in insurance policies, pooled policies, segregated policies - have relevant performance benchmarks -Understand asset class risks & returns, asset managers

Good Governance Strategy - Management of Stakeholder Relationships

•Communication & Access to Information

- Board has to have access to all info relevant to Fund

-Confidentiality (guard against missusers of information)

- Information about Fund belongs to Fund, not service providers

Good Governance Strategy - Management of Stakeholder Relationships

•Communication Policy (content for members & beneficiaries)

-should be in place to interact with members & beneficiaries- illustrate benefit calculations, method & timing of benefit payments- changes to regulatory environment- financial reporting from financials- funding status & funding method of Fund- Changes in investment strategy- fund returns vs benchmarks- Contact details of Fund registered office

Good Governance Strategy - Management of Stakeholder Relationships

•Communicate clearly with members, sponsors & employers•Act and communicate in good faith with members, sponsors & employers•Have a procurement system in place to guide service provider selection & review